THCOM: The Unclear Path

Thaicom Public Company Limited (THCOM) made a turnaround to book a profit of 77 million baht in 3Q20 from a loss of 113 million baht a year ago, bringing shareholders so much happiness and rejoicing. However, when reviewing the management discussion, the 3Q profit mainly came from a decline in cost, not from sales revenue.

 

Revenue from sales of goods and rendering of services was 918 million baht, decreased by 22.7% YoY, as revenue from satellite and related services dropped 22% to 915 million baht and revenue from internet and media services declined 67.9% to 9 million baht.

 

Meanwhile cost of sales of goods and rendering of services was 736 million baht, decreasing 20.4% YoY, as cost of satellite and related services plugned 19.1% to 738 million baht driven by the decrease of revenue from satellite and related services, together with a decline of depreciation following the impairment of satellite assets and equipment both conventional and broadband service in 2019. 

 

As well as a decrease in cost of Internet and media services of 85.7% YoY to 4 million baht as a result of the divestment of Cambodian DTV Network Limited (CDN).

 

Selling and administrative expenses dropped 32% YoY to 191 million baht.

 

A decline in cost is positive toward the company, but if revenue continues seeing no growth, it will not be a good thing for THCOM in the long-term. 

 

The problem that THCOM has yet to solve.

 

Even though THCOM posts a profit for this quarter, the company still has a dispute with the Ministry of Digital Economy and Society (DES). DES has requested the Arbitration to order THCOM to pay the compensation for Thaicom 5 at the amount of 7,800 million baht with an interest.

 

After the announcement, investors poured a huge amount of THCOM’s shares, plunging the stock as much as 7.89% before gradually climbing to close at ฿5.45/share, decreasing 4.39% with a trading value of 65.10 million baht.

 

This is the event that we have to closely keep eyes on.